Monday's Market: Stocks, in Mellow Summer Mode, Nudge Higher

After a turbulent session Friday, Wall Street reverted to a more serene summer mood today.

The Dow Jones Industrial Average closed up 46.72 points, or 0.5%, to 10,299.40, while the Nasdaq Composite finished higher by 22.6 points, or 1.1%, to 2026.7. The broader-market S&P 500 ended ahead 8.19 points, or 0.7%, to 1198.78.

Trading volume was feather-light on both the New York Stock Exchange and Nasdaq. "The market is in holiday mode again today," said Rob Cohen, co-head of listed trading at Credit Suisse First Boston, who made little of the market's bounce.

"The shorts are covering after last week's selloff," said Cohen. "Today's activity is not a catalyst: It's a one-day event related to the fact that people were out last week and they are nibbling at stocks today." In light trading on Friday, the Dow tumbled 227 points, while the Nasdaq fell 76 points as a result of profit warnings from the tech sector and disappointing data about the labor market.

"The market treaded water today, but it is still concerned about the economy," said Peter Coolidge, managing director of trading at Brean Murray Foster Securities. As for today's light trading, he noted: "There's no leadership, no reason to rush into stocks. The market would have to go up or down substantially for volume to increase substantially. At this level, there isn't a lot of enthusiasm."

Second-quarter earnings season, under way this week, should generate attention. The analyst community is hoping for signs that business is improving. However, some pros worry the reporting season will bring more bad news: Analysts, according to Thomson Financial/First Call, are already forecasting an 18% drop in quarterly earnings, more than twice the first quarter's 6.3% contraction.

But some research analysts' have pointed to light at the end of the tunnel. Bear Stearns' top-shelf tech analyst Andrew Neff this morning upgraded data-storage concern EMC(EMC Quote) and server shop Sun Microsystems(SUNW Quote) to buy from attractive, based on what he sees as signs of a bottoming or upturn in the domestic economy.

Shares of EMC rose 72 cents to $22.32, while Sun climbed $1.14 to $14.82. Last Thursday, EMC was one of several tech companies to issue a profit warning, driving Friday's selloff. The Philadelphia Stock Exchange Computer Box Maker Index rose 0.52% today.

Another Day, Another Warning

Communications-chip maker Conexant(CNXT Quote) said it would miss analysts fiscal third-quarter earnings estimates. The company now expects a third-quarter pro forma loss of 45 cents before special one-time charges. Analysts were expecting a loss of 43 cents. The company also lowered its revenue guidance to $200 million from $206 million. The stock shrugged off the warning, however, gaining 74 cents to $8.09.

AT&T(T Quote) was the biggest gainer on the Dow, after cable provider Comcast(CMCSK Quote) made an unsolicited offer to buy the battered telco's cable business, AT&T Broadband. Comcast offered to pay $44.5 billion in stock and assume $13.5 billion in debt for AT&T's broadband unit. The acquisition would create the world's largest broadband provider.

AT&T said it has no plans to sell its broadband unit, but that it would review the offer. AT&T increased $1.98 to $18.70, while Comcast decreased $2.98 to $39.30.

The Nasdaq Telecommunications Index boosted 1.2%.

AT&T Wireless(AWE Quote) closed off 39 cents to $16.56. It was spun off today, a little more than a year after AT&T staged a $10.6 billion gut-buster initial public offering of the wireless tracking stock.

Among sectors, utilities and retailers edged higher, while chip and oil stocks moved lower. For the year, the major indices are pitted in negative territory. The Dow is down 4.5%, the Nasdaq is behind 18%, and the S&P 500 is lower by 9.2%.

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Market Internals

Market Internals
Exchange	Advancers	Decliners	New Highs	New Lows	Volume
New York Stock Exchange	1,589	1,476	60	45	1 billion
Nasdaq Stock Market	2,027	1,717	70	91	1.4 billion

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Most Active Stocks

NYSE Most Actives
Company	Shares Traded
AT&T (T Quote)	46.5 million shares
AT&T Wireless (AWE Quote)	39.1 million shares
EMC (EMC Quote)	37.3 million shares

Nasdaq Most Actives
Company	Shares Traded
Cisco (CSCO Quote)	52.2 million shares
Comcast (CMCSK Quote)	47.2 million shares
Sun Microsystems (SUNW Quote)	42.9 million shares

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